International recruitment profession against proposed German contractor law changes

Proposed changes surrounding the use of contractors in Germany have been met with opposition from the international professional recruitment sector. The Association of Professional Staffing Companies (APSCo), which last year launched a dedicated office in Germany, has labelled the proposed reforms “damaging”, while global recruitment consultancies, including SThree and Hays, have formed a pressure group to lobby German Parliament on the issue.

Currently, it is a legal requirement for any company ‘leasing’ contractors to a German organisation to have an Arbeitnehmerüberlassungsgesetz (AüG) licence. While there is currently no restriction on the term that staff can be engaged through an AüG licence, under the proposed reforms, from January 2017 contractors will be classified as employees after 18 months, or will have to seek an alternative workplace. APSCo believes, as do many others, that this would have a disastrous impact on not only the flexible workforce, but also German business and the German economy.

APSCo has expressed concerns that the proposals have been pushed through following pressure from trade unions to stem the increase in non-unionised labour, without fair consideration of the wider ramifications. This comes at a time when 88 prominent German business-heads have published an open letter across the national press, urging Government to reconsider with the tagline, “Don’t destroy good work through unnecessary laws”.

The German recruitment market creates over €22billion of economic activity for Germany making it the fifth most active employment market in the world. It is estimated that the number of freelancers and self-employed is approaching 500,000.

Tremayne Elson, managing director of APSCo Germany, commented, “The German economy is a ticking demographic time bomb with a shortage of qualified new entrants coupled with a rapidly ageing workforce. Increasingly, the only way to resource a project or fill roles is by attracting freelancers. Assignments can easily last longer than the maximum 18 months, particularly on complicated technical projects.

“The reforms suggested by Minister Nahles do nothing to clarify the definition of a freelance relationship. Moreover, as it stands, they will add additional levels of confusion. APSCo members are committed to operating compliantly in Germany, however, if these reforms are introduced, it will become even more difficult to be confident of a contractor’s status. In the past, where a challenge was brought, the relationship with the ‘contractor’ could be redefined as ‘leased’. However, this second line of defence will no longer be possible under the proposals and the only option will be to automatically define the relationship as ‘employed’. In a world economy with an ever increasing flexibility in the professional workforce - and technology that is enabling a more creative work model – this is a leap backwards.”

Samantha Hurley, head of external relations at APSCo, said, “As in the UK, the German professional recruitment sector is in danger of falling victim to the restrictions of inappropriate, contradictory, ‘one size fits all’ legislation written to protect the potentially vulnerable workers in the blue collar staffing sector.

“Add to this the extra dimension of Germany’s powerful trade union movement – and its agenda to stop the rising trend of independent labour – and it is clear that the rationale behind the proposals is unlikely to have the interests of professional contractors, or the German economy, at its heart.”

Timo Lehne, geschäftsführer and director Germany of UK-based recruitment firm SThree, commented, “A ‘one size fits all’ approach will damage the German economy. We see this a little bit as King Canute trying to stop the tide. German industry, contractors and the professional staffing companies which provide them will all potentially lose out to a law which Chancellor Merkel wants to see implemented without delay.”